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December 16, 2009

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China beats US in IPO funds

CHINA has outstripped the United States in the amount of money raised from stock listings, underscoring the region's stronger economy and a resurgence in investment.

Companies have raised nearly US$52 billion from initial public offerings on exchanges in the Chinese mainland and Hong Kong so far this year, according to financial research firm Dealogic. That's about twice as much as the US$26.5 billion in American IPOs.

In 2007, the amount of money raised from IPOs in the mainland and Hong Kong also exceeded the United States total.

Hong Kong alone has drawn more than US$27 billion this year, making the south China's financial center the world's top city for equity capital raising for the first time, according to Dealogic's records dating to 1997.

Since 2000, Wall Street has led every year except for 2006, when London was the destination of choice.

The activity underscores the yawning gap in economic strength between Asia and the West.

At a time when the US and European economies are still suffering the effects of the financial crisis, China is headed for growth of 8 percent or more this year. Another indicator of Asia's economic rise has been China's auto market, which eclipsed the US as the world's biggest this year.

Chinese companies, looking to capitalize on liquidity created by government stimulus measures and raise their international profile, were behind all but a handful of the region's IPOs this year.

But even a couple of Western firms moved to cash in while solidifying their links to a region expected to help underpin their growth for years. US casino companies Las Vegas Sands and Wynn Resort both floated Hong Kong shares of their Macau operations in recent months.

Analysts point to a number of lackluster listings as a sign of investor fatigue that could slow the pace of offerings in the near term.

Over the long run, the trend is likely to continue even once the US regains some vitality as more and more firms seek a toehold in Asia.


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